Is Linden Lab (Second Life) Violating The Unlawful Internet Gambling Enforcement Act?

Processing online gambling payments is illegal for any US company. We’ve all read about the UIGEA (.pdf) and I’ve posted about the perils of this before. But now….the feds seem to be taking a closer look at Linden Lab for their role in the ‘payment processing’ in Second Life’s virtual casinos!

Yes, its true, Osama Bin Laden is still walking around a free man, but according to Cnet News, the Federal Government, by way of the U.S. Attorney’s Office for Northern California, seems to be pondering whether Second Life could be considered in the wrong by ‘processing’ virtual money transactions for their online virtual casinos!

Ginsu Yoon, who is Linden Lab’s current vice president for business affairs, said “We have invited the FBI several times to take a look around in Second Life and raise any concerns they would like, and we know of at least one instance that federal agents did look around in a virtual casino.”

Yoon said the company was seeking guidance on virtual gaming activity in Second Life but had not yet received clear rules from U.S. authorities. The FBI and the U.S. Attorney’s Office for Northern California declined to comment.

Most people will agree that since players can exchange Linden Dollars for actual US dollars that gambling with Linden Dollars in any one of Second Life’s hundreds of casinos offering poker, slot machines and blackjack …might actually be a crime. Consequently, would Linden Lab, who handles transactions for the Linden Dollar may be considered ‘processing payments’ for online gambling.

Attorney Sean Kane, a legal expert on the issues of virtual worlds at New York’s Drakeford & Kane had this to say, “If you’re buying money on the Lindex (a virtual currency exchange) and utilizing it for gambling purposes, Linden could have a much higher level of responsibility,” he added. “If they would be found in violation, that’s difficult to say, but I can see a much stronger case being made.”

PLEASE……….aren’t there better ways for governments to spend valuable law enforcement resources than going after a $1500 dollar a month virtual money virtual casino? Next I’m going to read that Second Life Casinos now have to be licensed out of Belize or Costa Rica to offer action!

Wow, digital money and virtual money are just so new to the world I suppose that any part they plays in online commerce will always be suspect.